Newsvine is latest win for Seattle VC firm

The sale of Newsvine to MSNBC.com is not the first time that a portfolio company of Second Avenue Partners has been sold to a media behometh this year.

Second Avenue’s Mike Slade strikes again

The Seattle venture capital firm also was an early backer of Sports Technologies Inc., the Connecticut startup whose Web site, FanNation.com, was acquired by Sports Illustrated in February.

Interestingly, Newsvine and Sports Technologies share a lot in common. Not only are they online news startups which have developed new ways for people to comment on and share information, but entrepreneurs from both startups sprung from the old Starwave/Walt Disney Internet Group in Seattle. (Earlier this year, I mentioned the Starwave mafia that Second Avenue’s Mike Slade — who led the Paul Allen-backed company during the 1990s — is cultivating.)

The similarities between Newsvine and FanNation don’t stop at the product or the people. Both built their companies in the true Web 2.0 spirit, with small teams and very little investment capital. (About $1.5 million for Newsvine and a little more than $1 million for FanNation.)

I asked Newsvine’s Mike Davidson — who calls the FanNation guys “some of the smartest product minds a media company could ever ask for” — about the connection.

“They are a lot like us: nimble, product-centric, and not interested in working in slow product cycles,” he said.

That characteristic is attractive to Nick Hanauer, a co-founder of Second Avenue.

“In general when it comes to innovating in consumer web content, small teams starting from scratch can accomplish exponentially more than comparable groups in large companies,” he said in an e-mail.

The quick-moving development process is something that Davidson is now hoping to bring to MSNBC.

“The idea is to develop as quickly as possible, throw things at the wall and see what sticks. Most stuff sticks, some stuff doesn’t. And to the extent that you can sort of view Newsvine as almost an ‘MSNBC.com labs,’ that might be a helpful way to visualize it.”

Davidson said the company has been an “extremely cost efficient” business since it was founded, with about $60,000 in monthly expenses. Ad revenue is growing and while it is not yet profitable Davidson says: “If you squint your eyes you can see it.”

And with two successes under its belt, we might see more investing from Second Avenue in the digital media/online advertising arena. Hanauer — who slammed a home run earlier this year when aQuantive was sold to Microsoft for $6 billion — said it is “still early in the evolution of content and business models on the Internet.”